Correlation Between Caltagirone SpA and COSTCO WHOLESALE

Can any of the company-specific risk be diversified away by investing in both Caltagirone SpA and COSTCO WHOLESALE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Caltagirone SpA and COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caltagirone SpA and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on Caltagirone SpA and COSTCO WHOLESALE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Caltagirone SpA with a short position of COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caltagirone SpA and COSTCO WHOLESALE.

Diversification Opportunities for Caltagirone SpA and COSTCO WHOLESALE

0.05

Correlation Coefficient

Caltagirone SpA  COSTCO WHOLESALE

Significant diversification

The 3 months correlation between Caltagirone and COSTCO is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Caltagirone SpA and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR and Caltagirone SpA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Caltagirone SpA are associated (or correlated) with COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of Caltagirone SpA i.e., Caltagirone SpA and COSTCO WHOLESALE go up and down completely randomly.

Pair Corralation between Caltagirone SpA and COSTCO WHOLESALE

Assuming the 90 days trading horizon Caltagirone SpA is expected to generate 1.15 times more return on investment than COSTCO WHOLESALE. However, Caltagirone SpA is 1.15 times more volatile than COSTCO WHOLESALE CDR. It trades about 0.11 of its potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about -0.03 per unit of risk. If you would invest  604.00  in Caltagirone SpA on December 29, 2024 and sell it today you would earn a total of  94.00  from holding Caltagirone SpA or generate 15.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Caltagirone SpA  vs.  COSTCO WHOLESALE CDR

Caltagirone SpA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caltagirone SpA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Caltagirone SpA unveiled solid returns over the last few months and may actually be approaching a breakup point.

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days COSTCO WHOLESALE CDR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COSTCO WHOLESALE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Caltagirone SpA and COSTCO WHOLESALE

The main advantage of trading using opposite Caltagirone SpA and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caltagirone SpA position performs unexpectedly, COSTCO WHOLESALE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in COSTCO WHOLESALE will offset losses from the drop in COSTCO WHOLESALE's long position.

The idea behind Caltagirone SpA and COSTCO WHOLESALE CDR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.